Flowers Foods has booked a $136m impairment as part of a review of the US bakery giant’s operations and portfolio.
The non-cash impairment of “intangible assets” contributed to a fourth-quarter net loss off of $67.1m over a 13-week period, compared to a $43.1m profit a year earlier measured on a 12-week basis.
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Adjusted net income fell 1.5% to $45.8m.
Similarly, the impairment weighed on full-year profits, which dropped 66.2% to $83.8m. Adjusted, net income was down 14.7% at $231.6m.
Revealing the review in the results announcement yesterday (12 February), chairman and CEO Ryals McMullian said Flowers Foods will look at its operations, portfolio, supply chain and “financial strategy”.
McMullian explained the review in the context of the external environment: “We remain committed to implementing further enhancements to drive improved results as we navigate ongoing category challenges.
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By GlobalData“Looking ahead to 2026, we anticipate these category headwinds, combined with one fewer week of operations, will result in financial performance below 2025 levels.”
The Dave’s Killer Bread and Canyon Bakehouse brand owner pointed to weaker sales in the new year amid a decline in fiscal 2025 volumes.
It expects sales of around $5.16bn to $5.27bn, translating to a range of down 1.8% to up 0.2%.
Sales in 2025 rose 3% to $5.26bn. Volumes dropped 2% while price/mix fell 0.8%.
Fourth-quarter sales increased 11% to $1.23bn, with a volume decrease of 2.2% and positive price/mix of 0.7%.
McMullian gave further insight into the review in his accompanying prepared remarks, saying “we are proactively conducting a comprehensive review of our operations aimed at positioning us to reignite top-line growth and expand margins”.
He added: “This review is focused on evaluating and optimising our brand portfolio while targeting investments in the most promising areas.”
McMullian said the traditional bread category “remained challenging” last year, with unit sales down 4% in the fourth quarter.
However, Dave’s Killer Bread gained 20 basis points of market share, while Nature’s Own, Canyon Bakehouse and Wonder only maintained unit share.
Commenting on the impairment, newly installed CFO Anthony Scaglione said: “Overall, our evaluation process is in its early stages, and I would say we are in the top of the first innings…
“As part of this review, we recognised that the long-term outlook for certain brands, while still part of our portfolio and supported, is lower than previously forecasted, resulting in an impairment.
“In the short term, we do not expect any further impairments based on our outlook for the remaining portfolio.”
Elsewhere, Flowers Foods booked a 14.7% increase in adjusted EBITDA for the fourth quarter to $117.4m. Diluted EPS slipped to a $0.32 loss from a positive $0.20 a year earlier and on and adjusted basis came in flat at $0.22
For the year, adjusted EBITDA decreased 0.6% to $535.2m. Diluted EPS fell to $0.40 from $1.17 in the corresponding period. Adjusted it was at $1.09 versus $1.28.
Adjusted EBITDA guidance was set at $465-495m and adjusted diluted EPS at $0.80-0.90.
